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Sunday, November 14, 2010

CASINO POISED TO ACQUIRE THAI CARREFOUR 'S SUPERMARKETS

Andrea Felsted in London and Scheherazade Daneshkhu in Paris, 17:12, Saturday 13 November 2010

Casino (Paris: FR0000125585 - news) , the French retailer, is poised to acquire Carrefour (Paris: FR0000120172 - news) 's Thai stores, put up for sale as part of an auction of the south east Asian assets of the world's second biggest supermarket group by sales.

The outcome of the hotly contested auction means Casino looks set to beat Tesco (LSE: TSCO.L - news) , the world's third biggest supermarket by sales, to the 40 Thai supermarkets put up for sale by Carrefour.

Tesco had been seen as a leading contender for the Thai assets given that it is the market leader in the country, and that it has a history of doing deals with Carrefour.

However, Tesco may have been forced to divest some of the stores for competition reasons, making a deal uneconomical. It was also said not to have bid as aggressively as some other potential buyers.

Casino is the second biggest operator in the Thai market, behind Tesco.

Analysts at Shore Capital have said that the Thai stores would be "nice to have but not essential" to Tesco, and it could pick up any assets that the victorious bidder was forced to dispose of.

No value is being put on the Thai deal, which could be announced as early as next week.

However, Carrefour had been looking for up to $1bn for the package of stores in Thailand, Malaysia and Singapore. The Thai stores are thought to account for more than two-thirds of the value of the assets, with Malaysia worth about one-third.

The auctions for the 19 Malaysian stores, and two Singapore stores remain ongoing, although some people familiar with the process expect it to be concluded within the next week or so.

Carrefour is selling the stores because it wants to concentrate its efforts on countries in which it is market leader rather than spreading itself too thin.

The planned sale dovetails with chief executive Lars Olofsson's strategy of redeploying resources away from markets in which the retailer has little prospect of becoming market leader into countries where it is in pole position or has the top slot in sight.

The south east Asian sale will still leave Carrefour with meaningful operations in China - nearly 70 per cent of its regional stores are in the world's most populous country - and Indonesia. Asia accounted for 8 per cent of its €86bn sales last year.

About half a dozen bidders, including Tesco, Casino, Singapore's Dairy Farm and Japan's Aeon (6599.KL -news) , submitted second round bids for all or part of the package of assets last week.

The deal coincided with the auction of Indonesia's Matahari hypermarkets and supermarkets, with several significant foreign retailers jostling to acquire the chains, to gain a foothold in one of Asia's most powerful emerging economies.

The interest in the two auctions underlines the appetite for retail assets in parts of Asia outside of China. While China tends to capture the imagination of investors and analysts, Asian retail markets outside of the region also offer significant potential.